The Malaysian government has raised the excise duty on tobacco by 14 percent ahead of its 2014 budget due on Oct. 25, and the country’s biggest cigarette manufacturer has described the move as “shocking and disappointing,” according to a story by Pauline Ng for the Business Times.

The increase was gazetted on Friday.

“Such a move will exacerbate the already high levels of illegal cigarettes in Malaysia and dampen all efforts that have been taken thus far to address this national scourge,” British American Tobacco Malaysia managing director Stefano Clini said in a statement on Sunday.

Over the years, the Confederation of Malaysian Tobacco Manufacturers has highlighted the growth of illicit cigarettes, which are estimated to account for at least a third of the total market in the country and to cost the government more than MYR2 billion in lost taxes.

Meanwhile, a taxation expert was quoted in a story in The Star as saying that excise tax hikes needed to be implemented gradually to avoid destabilizing the legal cigarette market.

International Tax and Investment Centre President Daniel A. Witt said an increase that was too high implemented over too short a term could shock the market and create a demand for black market goods.

“Increasing excise tax should be done in a predictable way to stabilize the legal market, meaning those who can be taxed,” said Witt, who presented the Asia-11: Illicit Toba­cco Indicator 2012 study to the media on Monday. Asia-11 is a report on the illicit cigarette trade among 11 countries in 2012.

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